The response to Covid-19 has marked a historic expansion in the size and coverage of government support for people experiencing unemployment.
As we near the end of expanded federal unemployment insurance benefits, state governors now face a choice of whether to continue them. To that point, the Biden administration urged states with high unemployment to use American Rescue Plan funds to continue unemployment assistance to workers past Sept. 6.
So, what are the pros and cons of expanded UI benefits for American households?
Expanded UI benefits during Covid-19 prevented spending declines for the majority of people who lost their jobs, providing valuable support to the economy as overall demand was contracting sharply. Despite sweeping changes in daily life, UI boosted demand even when the bulk of the population — those still employed — cut spending and increased savings.